Demand for Flexible B2B Payments Fuels EU BNPL Growth

Business-to-business (B2B) payments are fueling the uptake of buy now, pay later (BNPL) in Europe.

While the explosion of the BNPL concept has primarily centered on the business-to-consumer (B2C) sector, in recent years, BNPL for business has been gaining traction, buoyed by increasing funding rounds and partnerships.

In Europe, for example, Berlin-based B2B BNPL firm Mondu topped up its Series A with an additional $13 million; Santander, Allianz Trade and Two launched a new BNPL solution for large businesses; and Hokodo and Lemonway teamed up to help B2B marketplaces offer trade credit online — all announced in January of this year.

The flurry of activity suggests that there is plenty of demand from businesses for flexible payment solutions, prompting B2B lenders to use BNPL solutions to meet a variety of business credit needs.

Mondu, for instance, is marketing its solution to wholesalers that want to drive more sales by offering their business clients additional time to pay. Just like in the consumer space, it enables businesses to easily integrate BNPL options into their online checkout flow, while Mondu assesses buyers’ creditworthiness and takes on the risk of non-payment itself.

But although the basic premise may be similar, Mondu is anticipating that the ultimate prize is far greater in the B2B segment.

As the company’s Co-founder and Co-CEO Philipp Povel told PYMNTS in an interview last year, “while B2B BNPL is behind the consumer BNPL market, we believe there is a $200 [billion] opportunity just in Europe and the U.S., which is bigger than the global consumer BNPL market.”

Another European startup Hokodo has a similar proposition but is now targeting marketplace platforms following a partnership with French FinTech Lemonway.

As part of the new offering, Hokodo will apply its risk assessment technology, while Lemonway will bring its expertise in platform payments and compliance to the table. Together, the two firms hope to easily integrate BNPL into Europe’s B2B marketplaces, providing all the advantages flexible payments can offer to potentially thousands of buyers and sellers on the continent.

An Enterprise BNPL Solution

If Hokodo is hoping to tap into small- to medium-sized business (SMB) demand for BNPL by going after marketplace eCommerce, the Santander, Allianz Trade and Two’s recent tie-up is targeting the opposite end of the spectrum.

By combining Two’s eCommerce BNPL experience, Santander’s heavyweight capital and Allianz’s underwriting capabilities, the three firms’ lending product aims to meet the more complex and capital-intensive needs of enterprise clients.

Through the partnership, Allianz Trade will provide credit insurance, Two will power the technology behind the new platform, while Santander’s Corporate and Investment Banking (CIB) unit will fund the loans.

What’s more, with a multinational bank and one of the world’s largest insurers on board, the new platform is expected to cater to the needs of global businesses and offer BNPL services that span cross-border supply chains and multiple currencies.

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